Episode 3

Host: Matt Hall

Guest: Rick Hill

00:00:06 MH Welcome to Take the Long View with Matt Hall. This is a podcast to help reframe the way you think about your money, emotions, behavior and time. The goal: helping you live richly. We'll talk with the best thought leaders we know to learn from their meaningful experiences. We'll bury the vegetables of world-class thinking and stories and conversation. Helping you reframe your prospective so that, you too, can put the odds of long-term success on your side.


00:00:42 MH Today, I'm joined by Rick Hill. Rick is my business partner and, in many ways, one of the best people I know on planet Earth. He is wise, kind, funny and oozes integrity. He's had silver hair since he was 10. Just kidding since I think he was maybe 40. And Rick Hill is originally from Wilmington, Delaware and came to St. Louis to be in the beer business as a finance executive at the once great Anheuser Busch. He took an early retirement package in the late 90's and joined an investment firm a year before I arrived. And then I swept him off his feet and we became life-long friends and eventually business partners. 00:01:19 We're going to learn a lot about Rick's experiences and his wisdom and I'm so grateful he's here with me to share some of his gems.

Rick, how's it feel to be on a podcast?

00:01:33 RH Well it's a little bit different for me. You're a pro, you know. I've listened to a few podcasts, but this my first one being a participant.

00:01:42 MH Classic Rick Hill humility. I build you up and you bring it back down. That's one of the things I love about you. You know, your claim to fame is, well, with a lot of people who know you, is setting expectations. You have a great story that you always share with people who are getting married and, um, maybe you could share some of that wisdom with our audience.

00:02:04 MH Well, yeah, I think, I think personally, people are happier if they set expectations a little bit lower than they really expect and then the reality is better than the, you know, than what you expect, eh, whether you go to a movie or anything else. If I go to a fancy movie, for example, and I like it a lot, I'll tell my friends, how did... and they ask me how did you like it. I say, "Well, it was, it was pretty good.

00:02:26 MH Mm hmm.

00:02:26 RH I won't say it was great because if I say it was great, then they have high expectations. They may have liked the movie, but they don't have quite as much, liked it as much as I did. So, in the case of new couples getting married, my story is this. Is that, for example, you always want… when you're wife is home with young kids, for example, after you get married and have a few kids and you're, you want to get home to see, you know, the wife and the kids and generally you're home by like say 5:30 after work. But occasionally, someone will say, "Hey, let's go have a drink afterwards. Someone is having a birthday, let's go celebrate it” and you tell your wife you'll be a little bit later on Thursday. You know, I'm just going out with the guys and have a drink and I'll be home a little bit later. And you expect, okay, I'll go out... I'll leave the office about 5:00, I’ll have a drink about an hour and get home in a half hour and you say, "Okay, I'll be home at 6:30." And she says, "Okay, that's okay. You're usually home at 5:30 so it's only an hour later." I tell people, "No! Don't ever tell them 6:30. Add an extra hour, hour and a half and say you'll be home at 7:30 or 8:00". And that way, if by chance you drink a little bit longer, had traffic coming home and you get home let's say at 7:15. And she's so happy you're home, you're home before 7:30 or 8:00 and you know, otherwise, she'd be very upset if you said 6:30 and you get home 7:30, 7:15. So, always extend the time a little bit, at least an hour. Because my experience is, things always take longer.

00:03:48 MH Exactly. I love that advise. It sounds so simple too. But it pains people to add that extra hour because you know the initial reaction is going to be, "oooo, that late?" But then you're always golden!

00:03:59 RH Yeah.

00:04:00 MH You're almost always gonna be on time! Speaking of on time, you know, let's talk about that for a second. The old Anheuser Busch story about time and what being on time means. Do you want to tell one of those stories?

00:04:16 RH Ah, yeah sure. It's a... that's one thing you learned at Anheuser Busch was that, you know, you had a lot of meetings. so you never wanted to be, you know, on time, you were usually late. So that the eh saying at Anheuser Busch was, "If you're 15 minutes early, you're on time. If you're on time, you're actually late”. And a good example of this was one time, we were flying the company plane here in St. Louis and we had like a 7:15 departure from the terminal, it's a small terminal with no activity there other than our plane. So, everybody got there about a quarter of seven to make sure you are on... and you got in the plane around 7:00 and August Busch comes on around 7:00 and we say, "there one's more person who hasn't quite made it on, made it on". And so, I see him pulling up in the drive, in the parking lot right now. Here he comes August! August says, "He's late! Let's go!" So, the guy starts running toward the airplane waving his hands and the pilot says, "Should I go August?" August says, "Keep going". I felt sorry, we all kept very quiet. That guy kind of put his head down and walked back to his car.

00:05:23 MH Wow! Wow! If you're early, you're on time!

00:05:28 RH That's right! So, I feel that way even now, you know, meeting friends for dinner something like that. They say we'll meet you at 7:00, I'm always there by a quarter of seven. I'm always usually the first one at any kind of meeting or any kind of social event.

00:05:42 MH I love those stories. Um, okay, well let's go back in time a little bit. Before we met, you're originally from Delaware. What do you remember from, ah, life in Delaware as a kid?

00:05:54 RH Well, it's a small city. It's a lot like St. Louis as far as it's dominated by big companies. DuPont was the main company in Wilmington. It's kind of what Anheuser Busch was when I came to St. Louis. Um but it's, you know, it's near the Philadelphia in the east coast, obviously, and so it's a lot... My background was, you know, going to the beach in New Jersey in the shore and, you know. But I left Wilmington, Delaware, you know, after I went to college, and so I really didn't go back there after I turned like 20.

00:06:25 MH Mm hmm.

00:06:26 RH But, a lot of my friends still live there, and I like going back to visit them, but generally, when I, when I moved to St. Louis with Anheuser Busch, we pretty much left the east coast.

00:06:35 MH Mm hmm. But you went to Wake Forest for undergrad. Did you have a good experience there?

00:06:40 RH Uh, yeah. I did! I liked it. It's a small college but it has... it played, you know, big time sports and I've always loved sports personally, either playing them or watching them. So, uh, it gave me that interest in, you know, watching them play. I like the school. I like the people. You know, I definitely was in the south. I didn't realize when I went there, how much I was in the south because everyone was saying, "Where you from?" I said, "I'm from Delaware". And they said, "Are you a Yankee?" And I said, "I don't know? I guess, I guess I am". So, I never realized they’re still fighting this Civil War down there. And they know whether you're a Yankee or a, you know, a southerner. So, ah, but I learned that quickly. So, yeah, but I did enjoy the school though.

00:07:23 MH And then after Wake Forest, eventually, you find your way to Wharton for business school.

00:07:30 RH Yeah, I, yeah, I was planning on actually going into the Army, but I was declared 4-F in ROTC after my junior year doing that at summer camp. I had a detached retina in my eyes so that didn't qualify me for service. So, I had... then I had to rearrange my plans. So, then I decided to go to graduate school and went to Wharton, ah, which I enjoyed. I must admit that was a place where I felt like I had to study hard and really work, and I, it was a time where I put a lot of effort in getting through that in two years.

00:08:02 MH So you come out of Wharton and you got a fancy MBA from a great school and then what?

00:08:07 RH Well when I was getting ready to graduate, the one class that I had at Wharton, which I really liked a lot was an investment class. And, um, it was the one, and back then, of course, and this is now back in the mid '60's. This is where you didn't have iPhones or anything technology. And one of the classes we had was trying to analyze a company. And so okay, look at the annual report, get, go to the library, get all the information you can get on the company and tell me whether you would buy that stock or sell that stock. And so, since my dad worked with DuPont, I said, "I think I'll pick Dupont". I picked DuPont and I did all of this analysis and I came back and I said, I wrote a paper about, I think the stock's too high-priced. I would sell it. And then I went back to my father and I said, "Dad, I think you ought to get rid of all of your DuPont stock". And he said, "Are you crazy? The company has done a lot of research, new products coming out, it's done well over the last 25 years. I'm not selling my stock. It stock always goes up." 00:09:05

Well, the next 6, over the next 6 months, the stocks dropped about 30%. And my dad didn't sell and he said to me at one point, he said, "I should have followed your advice". Well the problem with that was, I thought I was very smart. I was probably more lucky than smart, but, because I made the decision I would have sold, but looking back on that decision, I realize now, it was just lucky that it did go down over the next 6 months. Um, but anyway I did like the class. I liked just staying on top of things, you know, reading the paper about economics and just hearing the news going on in the world, you know.

So, when I left Wharton, I went to become a stockbroker. Um, and I thought, my idea then was, okay, you've got all this education, you can now begin to advise people, put together, you know, a plan and invest their money. 00:09:57 And I went to work with Dean Witter in Philadelphia, and I had like a 6 week training program in New York City. And I figured I'll go up there and I'll learn a lot about how to, you know, how to put stocks together in a portfolio and how to analyze stocks. Well, what happened, it was all about how to sell, how to respond to questions, how to make cold calls. Not one thing did they bring out anything to do with finance. It was all marketing.

Um, and when I got started to do my job when I got back to Philadelphia, I enjoyed, you know, doing some of it, but it was all just, you had to be constantly selling and you'd have to talk to your friends. Most of my clients were my parents' friends really. Um, and so I did it for like three years. I did the... I came... I used to do cold calls at night, making phone calls to like 50 people that I didn't even know at all. Back then it was not as bad as it is today. People didn't get that many cold calls, so people would talk to you, but it was just a... it wasn't my, it wasn't my strength as far as what I like doing.

00:11:05 MH Yeah, knowing you, I feel like that was probably torture.

00:11:10 RH Ah, it was. I had... I think what happens is, you used to get what was called a reversed directory in the phone book. So, you looked at what streets in Philadelphia were kind of, you know, had nice areas to live. And I would start calling and the first call was always the hardest. And then as you got going, it got easier at the second or third call. But it was, yeah, it was very stressful. But I had... you kinda get... you have a little, you know, like a market or sales strategy and, ah, what happens occasionally someone would say, “Yes, I would like to hear from you. Call me back if you have a good stock tip” or something like that. It was... it was all they recommended was individual stocks. It was nothing else other than, here's a stock that we think is a good buy today. Um, but it was not a way that I could see my future. I could not do it very long.

00:12:01 MH Mm hmm.

00:12:02 RH Ad what happened to me then was I, I enjoyed the first couple years, but what happened was in 1969 is when the Dow Jones almost hit 1,000. It's hard to believe it was that low. It was 25,000 today, but back then it got to be like 995. And we were thinking, oh hey kid, he's going to hit 1,000 it will be a big day in the market, you know. Well, over the next, you know, 6 or 7 months, it dropped 35% back to 600 and something. And I remember every one of my clients, I started in '67, every one of my clients had lost...was in...is in negative territory. All had lost money. And most of my clients as I mentioned were my parents... friends of my parents. So, I always felt bad going back to Wilmington, Delaware and seeing them and a lot of them are neighbors and they would always come by and say, "Hey Rick! What's going on with my stocks?" And so what I did was I used to just tell my parents, "I'm coming home this weekend, open up the garage door, I'm gonna pull the car in, I don't want anybody to know I'm home because I don't want them to come bug me because I know, I can't give them any kind of advice. So, I'll say, "Sorry it's down. You know, too bad". So, I didn't want to say that, so I pretty much stayed pretty much in the dark from my parents', my parents' friends.

00:13:19 MH And yet, the whole industry at that time really didn't know anything about well we'll talk a little more about it in a minute about efficient market theory and mutual funds were either just getting going or really not a part of the popular strategy for investors. Most people did pick stocks, had no underlying philosophy, and so you weren’t doing anything that was any different from what the norm was in the country. But knowing you, my guess is what was hurtful or shameful in some way was, you couldn't, you know, out-think what was happening in the market. You couldn't, there was no strategy that could defend you from what was happening.

00:14:00 RH Yeah, it's hard to imagine but back in the late 60's, finance was pretty much, you know, in the dark ages really. A lot of the studies have come out, like, you know, like Bill Sharpe won the Nobel Prize in 1990. You know, Famme French, you know they came out with all these papers and you know later on, so it... nobody had any idea how to do anything other than buy stocks. And there's very few articles written about, you know, you know, using even index funds didn't exist. They didn't start until the 70's so yeah it was definitely the dark ages. And everybody just bought stocks in US stocks. Nobody bought bonds.

00:14:39 MH And the training you received, as you said, was training on sales.

00:14:43 RH Yeah.

00:14:44 MH Not on a way to think or invest properly, and like, you're, I know like you are, as I said in the introduction, you ooze trust and integrity. And so, your aim is so true with respect to helping others. You know, before doing this podcast, I asked some of the people we work with, um, about what they feel after they're around you, what they're left with, what their residue is, and they just said, "You have such a selflessness and a generosity of care for others, that they, I mean, you know everybody that works with you loves you. And I think as I reflect back on you in this position, it's like, how… I can't imagine how hard that must have been to not have a strategy to be able to help people you knew you really were aimed at serving, you weren't really a sales person.

00:15:34 RH Yeah, I still can think back as it's been 50 years now in 1969, going to my branch manager at Dean Witter in Philadelphia and saying to him, "What should I do? All of these stocks that I'm recommending are going down. What's a good strategy?" They looked at me like, "what do you mean strategy? Just keep trading. Keep selling what you... if you own the stock, sell it. If you want to buy, buy something else." He said, “If you can't stand this kind of, you know, do that, you're in the wrong business". I think I was right. I was definitely in the wrong business.

00:16:11 MH At that time.

00:16:12 RH At that time.

00:16:13 MH Okay. So let's jump forward. Let's get out of that business back in the 60's, and let's go to the beer business and let's move to St, Louis. How'd that come about?

00:16:21 RH Well, I told my wife, I said, "I think I'm going to quit my job". In those days, the husband kind of made the decision, I mean. A lot of my friends, I always, it's kind, back then it was, I think I need to quit this job, move somewhere else. And she would say, "Okay". We had two young kids at that time. Where do you want to live? I said anywhere but New York City and Alaska, something like that. So, I sent out like 300 letters to companies and most of them said, "Thanks, we have nothing available. We'll keep your resume on file for a year". But actually, Wharton had an alumni placement service and they had a job at Anheuser Busch and I applied for it and I got an interview and I got the job. 00:17:09

I knew nothing about St. Louis and all our friends kept saying, "Awe, it's too bad you're leaving New Jersey/Philadelphia, you're going to St. Louis. People in St. Louis are like, "Aren't you happier here versus living in Philadelphia?” So, it depends on where you live. But I feel very fortunate in picking Anheuser Busch, I mean hired by Anheuser Busch, because they was... When I joined Anheuser Busch, which it had an 18% market share and when I left 25 years later, it had a 48% market share. So, it was a very growing... a growth environment, adding new breweries, new beer products, new divisions. So, it was a very good time to be at Anheuser Busch.

00:17:51 MH Mm hmm. And there was, I mean, I would imagine, um, when you moved to St. Louis and you said I work for the brewery, that had a certain amount of prestige to it. That was a... that would be a good story to tell when you're walking around or making new friends. I mean there was certainly a good amount of civic pride and, you know, just good feeling around the brewery. Did you sense that when you came to St. Louis?

00:18:18 RH Yeah, that was a big surprise to me because you know I thought Anheuser Busch was just another company.

00:18:23 MH Right.

00:18:23 RH Because I looked at other companies who I could have worked for at that time. So, we moved into St. Louis in November and we were unpacking our car, you know, and our neighbors came by and they all welcomed us into the neighborhood. And they said, "What brings you to St. Louis?" And I said, "Well, I'm going to start working for Anheuser Busch". And all the men said, "Anheuser Busch? How'd you get that job?" I said, "What do you mean? I applied and I got it." And he said, "Oh my God! That's a great company. If you hear of any openings, let me know. I want to work there." Well I had no idea, it's a company who sells beer. What's the big deal? It was a great company for St. Louis, you know, as you said it's all the supports, the charities in St. Louis that owns the baseball team. You know, they did a lot for St. Louis. It's... I look back and I left before it was acquired by Endev, but it's a shame that it's no longer the company that it was back when I was there.

00:19:19 MH But a lot of great... you made a lot of great friends, had amazing experiences, and I think one of the coolest things and we tell this story a lot about the brewery is... back in the mid 80's, they made a really brave decision with how they managed their own money and I think this is great for shadowing for what comes in your own future. Can you tell us a little about the story of how the brewery managed their money and how they made a really important decision that was, in many ways, ahead of its time?

00:19:49 RH Yeah. This gets us back into the investment field when I was the assistant treasurer of Anheuser Busch, and in the treasure group, we did an analysis. The pension committee of Anheuser Busch said, "You know, we want somebody to look at how we invest our money. We haven't done that well in investing money in the last, you know, 10-15 years. Is there a better way to do it?” Because what they said was, we have a consultant that identifies the best money managers for our pension. They can identify the best active fund manager and the best international fund manager and being their benchmarks over the last, you know, 3 and 5 years, we get money and then the next couple of years they don't do that well and they gotta replace the... the consultant says, "We want to replace this one manager and that way we've got somebody better now”. So, they kept moving money around, but never did that well. 00:20:39

So, we did a study and what they found was that buying just the index funds or buying the benchmarks would be better than paying all these high fees for the acting managers. So, they fired the consultant, they fired the acting managers and went straight to index funds for the pension plan. And then they also changed in the 401K options for the employees, they got rid of all the active funds in the 401K plan and went to all pure index funds except you can still buy Anheuser Busch stock. So, I saw the results of this study and I had been still picking stocks up until then. I thought I could still study the markets and do well by picking stocks. I looked at all this evidence they presented to the pension committee and I said, "Wait a minute, this looks all so overwhelming. Why would I try to pick stocks when it shows the benchmarks wins almost the major... almost every time, not every time, but the high majority of the time is won by the index funds”.

So, I sold all my individual stocks and all I did was buy index funds. And so, from that point on, I just said, "I'm not going to spend all my time doing all this extra work I was doing trying to pick the stocks."

00:21:53 MH What an amazing decision that the brewery made at a time when it wasn't quite as popular as it is now. I think now people say, "Oh yeah, I've seen some of the evidence, or I know that most active managers can't beat their benchmarks or individual stock pickers can't keep pace with a simple average. Um. but getting that lesson a long, long time ago was probably, hugely valuable. I think at one point, you may have said to me, well you say it. Have you made more money as a worker or as an investor?

00:22:24 RH Well definitely as an investor. I think that's one of the things that, you know, a lot of people who struck their own business that they think they make their money from the business. But in my case, I made most of my money as an investor. That's one thing I learned at Wharton, also, the benefit of compound interest. I mean, you don't realize that if you just have Take the Long View and put money in over time, let it grow, it's amazing how much you can accumulate money just by being patient and taking advantage of the compound interest.

00:22:57 MH Yea, it's boring but it works.

00:22:59 RH Yes, Bill Sharpe who won the Nobel Prize said, "It's a boring way to get rich." You can't brag to your friends about, I bought this stock at 15 that's now at 75. But it's just the best way to invest. But you have to have humility. You can't beat the market.

00:23:16 MH But that's one of the cool things I think about your experience is that Dean Witter experience before you came to Anheuser Busch helped create some of that humility. Whereas, our friend, Larry Swedgeroh has said, "It's tuition". Some of the money you lose in buying individual stocks, which is eventually, you're likely to lose money because it's difficult to outperform the benchmark. Some of that lost money is really tuition. You learn a very valuable lesson and that humility may have really set you up for openness at Anheuser Busch as you saw the data and evidence that told a story that was different from what you, um, learned and what was conventional wisdom at the time.

00:23:56 RH Yeah, and I think in addition to helping you as an investor, it also, I think, frees up a lot of time. Because what I figured out, after I got the evidence about, you know, buying index funds rather than individual stock, I went back and looked at all the time I spent reading financial magazines, getting Baron's on the weekend and going through that page by page, going to economic forecast lunches given by banks here in St. Louis, I figured I spend about 240 hours a year and what I consider kind of wasteful, it had no value, wasteful time, which is roughly six weeks of my life, 40 hours a week, really had no value. And so besides getting me, I think a better investment plan, it freed up a lot of time to do other things in my life, whether it was doing more at work and doing more with my family or doing more of just activities. It's a game changer as far as time, saving time, trying to do other things. Once you believe this philosophy of getting the access to the market in a low-cost way, it saves a lot of... and once you believe it, honestly believe it, it saves you time.

00:25:10 MH Yeah, I think that's so cool because that's really where the strategy intersects with life and that's one of the most, I think, rewarding pieces of this puzzle. Okay, so let's keep going. So now you're at Anheuser Busch, you're super successful, you're a big muckety muck and you've got all these stock options and you're investing in a sort of indexy-passive way. Life’s good. You live in a perfect little house in a nice neighborhood in St. Louis. You're married to an awesome woman, by the way, this is a cool thing Rick told me once. I think this is such a nice thing for any husband or partner to say. Um, early on when we met, Rick said, "If you like me, wait til you meet my wife. She's my secret weapon". And I think that's true. Lynn Hill, Rick's wife, is an awesome partner. I think also, you know, because I think in many ways you're my second marriage in both relationships. One of the cool things is when you have shared values and complimentary skills and you and Lynn certainly have that and I think in some ways, we have that.

00:26:10 RH Yeah, well thanks for saying that. I think, yeah, I think from when I first met you that's what it was. I think we liked each other on a personal basis, you know, we like to do things together and talk of the same interest as far as talking, we play golf together and tennis. But we were different people as far as our skill sets.

00:26:30 MH Yeah, totally different.

00:26:32 RH Ah, but we all had the same values as far as you know, doing what's right for the client, being honest and truthful, you know, and doing all those things but it was... but as far as activity-wise, I enjoy more of the financial aspects of it. I really enjoy trying to like solve problems you might say. And at Anheuser Busch, I used to like to get a situation and just figure something out, do a project. Well, you're so good at the marketing and, you know, the sales side and the communication side, which I don't mind. I'm better at it than I was, you know, maybe 25 years ago... after meeting you probably, but I just eh...

00:27:11 MH Yeah, I think we've rubbed off on each other in really good ways.

00:27:14 RH Yeah.

00:27:15 MH Um, okay but let's... before we jump to when we get going. Let's go back to, you're at Anheuser Busch, and how do you decide to get out of there? You've got this dream gig, you're in this cool business, you're in the beer business, and it's successful. It's a dominant player in the world, what are you going to do?

00:27:33 RH Yeah, well at age 55, at that point, I'd had been there almost 25 years, so I kind of was eligible, at that point, to leave and keep most of my pension. I kept my health benefits at that time. So, I told my wife, Lynn, I said, "What do you want to do?" She was teaching school then. You know, I said I can leave Anheuser Busch, we could, you know, our kids, we have two kids, both of them out of state. We can move, live by one of them, we could travel, we could something else, you can quit your job. We can both do anything we want to do. And it's a little bit frightening to have complete freedom to do anything. And we both agreed we like St. Louis. She said, "I'll quit my job so we can then travel a little bit more”. We were kind of limited when she was teaching school. So, I said, "Well, I'd still like to do something, I just don't want to, I want to get away from the hassle of Anheuser Busch, you know, the long hours there. And so I said, "I think I might want to get back in the investment side”. Which, you know, as you said, I didn't want to get back into the sales side of investing so maybe there's other opportunities in investing maybe being more like an advisor and getting away from the marketing side of it. 00:28:45

And so, I started taking these tests for the CFP and I did that, and then I started looking around for just opportunities to work. And I started going to, you know, brokerage firms and banks and CPA firms that had an investment office in there with their practice. And they all said to me, "Yeah, you'd be great here. You've got the experience, you've got the Anheuser Busch connections, you'd got the education, now this would be great! Yeah, I'd love to have you come work for us". I said, "Well that's great! I'd like to try that also. But one thing I want to make clear. I want to recommend index funds for our clients." 00:29:22 They looked at me and said, "Index funds? You don't make any money doing that?" And said, "Come on, you gotta sell our products, our proprietary products, you gotta sell active funds. That's your decision fella, you won't make any money doing index funds". And I said, "Well, I just don't feel right, other than selling those products". And they said, "Okay, well, that's your call, but good luck". Luckily, they found this one firm, Buckingham, which did have the same philosophy as, not quite index funds, but actually even better than index funds, I thought once I got there. Um, it's little bit more of an enhancement taking the best size of index funds as far as being low cost, low tax impact, you know, take the haul for the long term. So, I went to work for Buckingham and my idea was maybe I'd work, you know, I don't know, 5 years let's say just to do something just to keep active. 00:30:22 And that's where I got back into the investment business.

00:30:25 MH Mm hmm. But in a whole different way.

00:30:27 RH Yeah, It was more, it was definitely more to my strengths as far as, you know, helping clients with, you know, their investment plans, you know, getting a little bit closer connection to clients. Knowing what their goals were, developing a plan for them to achieve with what they wanted to do with their money.

00:30:46 MH And how, for you, was this chapter of your life, different from your corporate experience?

00:30:54 RH Well, the big difference back then was when I worked for Anheuser Busch, I felt like I was working for like one boss. I had to please him and you know, satisfy his desires. You know, when I started working for Buckingham back in the investments, it felt like I had to work for the public. I made a comment, like, this is a little bit tougher. This is really different. I wasn't expecting I needed to have rather than one boss, maybe had 50-60 bosses. I had to please that many people. So, I must admit initially, I had a little bit of a transition to do that. But once I accepted that, then I got a lot of satisfaction because you make a difference in those lives. That's the thing, at Anheuser Busch, you felt like, okay I'm a small fish in a big pond, but here, now what I feel like is, you know, you are an important part of this company's future, really. And advise you give them is going to make a big difference in their lives. And so, it's a great satisfaction that I didn't expect to quite get, but I do. It took me a little bit of time to adjust, but now I do like it a lot now.

00:32:03 MH And did you really, at the time, you were kinda coming into this understand how emotional and behavioral this world is. You know, think there, obviously I think you have great technical strengths, but as we were kind of working together at Buckingham back in those days, was it ever puzzling to you, especially, you know, some of the data that would come out and say that investors’ returns were so lousy, in large part, not because they would have bad strategies necessarily, but because they had bad behavior. Was that sort of something you understood, or was that new to you?

00:32:42 RH I think it was probably not understood, new to me really. I think the one thing people… everyone has different risk profiles and different ways they react to things. And it’s the big value that we provide, really, is to get people as best they can to ignore the emotions, ignore the fear when things go bad. It’s not easy. What I’ve learned it’s almost impossible. When you get a bad situation like the market is going down, there’s been studies showing that really, it’s almost like a snake is going across your foot when you see a bad market. 00:33:17

And then so, and even people who are Ph.D.’s and teaching professors that, you know, at these big business schools, they have the same feelings that they tend to get… like I read an article about during the tech increase back in the early 2000 period when the tech stocks were doing very well… even these people who knew that this was high risk, would buy the stocks because all their neighbors kept saying that they bought at stock at 30 and it’s now 50. They couldn’t avoid it. They had the greed or they had to be part of the people buying the stock. I think emotions, you just can’t control and at best you can, ignore it, as long as you have a good plan, you can ignore it. If you don’t have a good plan, then obviously you’re in trouble. But if you have a good plan, the best advice is just to stay the course.

00:34:10 MH Yeah, switching gears for one second. You have a funny part of your habits, I guess, that is connected to controlling emotion. You want to tell people about your obsession with taping sports?

00:34:25 RH Yeah, well one of the things that… actually I just took a stress… I just got an annual physical and I had to fill out an 8-page input form to show all the medications you’re on and what drugs you take, you know, and your health as far as exercise. Like one of the questions was what about your stress levels? How much stress do you have in your job? Your daily life? And on a scale from 1 to 10 I put down a 2. And then is says when does your stress occur, and I said, “when I play golf”. 00:35:02

Um, and I think one other way I got over the stress… another time I have stress also is when I watch sporting events. When I watch my favorite teams play a sport, I notice I did get very excited. And so, what I’ve done over the… this has happened over maybe 25 years ago. I said I’m not going to watch any live event that my teams play. I’m going to tape the game. And so I tape it, at the end of the game, then very carefully, get on my tv and my iPhone and say, and I try to say, “Who won the game?”, not knowing what the score was. And so I would say, “Who won the game?” If my team won the game, I turn off my iPhone and then I can put the game back on and very relaxed, watch the game and very enjoyable, you know, take a break, you know. I don’t care who’s ahead at the half time. You know, it’s just so relaxing. Now if they lost the game, I won’t watch it. So, my only stress is 10 seconds when I put my iPhone on and look at who won. But I think personally, that’s a great way to watch the games. It saves a lot of time. If your team loses, and you just… the games themselves, you miss a little bit of the excitement, but it really is so much enjoyable to know that your team is going to win eventually.

00:36:19 MH Yeah. I always give you a hard time about that. (Laughs) But I love that that’s been a part of your routine for a long, long time. You were one of those guys who had more VCR’s than anybody I knew. Before the DVR came into reality, you had more VCR’s going than anyone I know.

00:36:37 RH Well before they had, you know, the DVR’s, and that kind of stuff, I bought two of those taping machines and I’d have one going and watching the other one, had the other one going, switching back and forth. Yeah, it’s kind of, I’m kind of obnoxious about it. I always tell my wife, “When the games going on, please do not tell me I have to turn off all my electronic equipment. I’m in silent mode for about 4 hours.”

00:37:04 MH Okay, so, a shameless plug. I talk a little bit about this next part in Odds On, The Making of an Evidence-Based Investor, the book I wrote a few years ago. So, if people want more detail on this, you check that out. But we became friends in 1999. That’s when we met. You want to talk a little bit about that phase and a little bit about what you think maybe sort of connected us.

00:37:30 RH Yeah, I think we met at Buckingham. I had been there let’s say a year, maybe before you joined. What I recall is that during lunchtime, I would be sitting in my cubicle, let’s say my office, I think probably cubicle more than anything, and I’d be reading the Wall Street Journal, kind of getting caught up and relaxing, you know, just taking a little bit of a break. You’d come by and say, “Hey! Let’s get some lunch!” I said, “Okay, let’s go to lunch.” I wasn’t that excited, but I’d say I love to read the Wall Street Journal. So, I would go to lunch with you.

00:38:04 MH Yeah, just to be clear. What you’re saying is, you liked being by yourself and reading your paper. And I interrupted that experience for you and said, “I’d think you’d have more fun if we did something together”.

00:38:16 RH Right.

00:38:16 MH Yeah.

00:38:17 RH And, if I went to lunch, I’d only go to lunch for maybe like 20 minutes to a half hour. I’d go to get a quick sandwich and get back to the office. With you, it took like an hour, hour and a half, it seemed like. But I must admit, Matt, you did loosen me up a little bit. And so, we kinda met that way. At lunch we talked about our lives, you know, our backgrounds, you know, your story about how you got there, and of course, and the book about how life was like on the active side. I could relate to that because that’s the way my life was like when I was back there 30 years prior probably. But then, what I remember is that we used to go to lunch together, generally, we tried to go to lunch together, but what happened was, other people was like, “Hey! You going to lunch? I’ll go with ya!” So, all of a sudden we had about 5 or 6 people going to lunch with us so we never really talked that much about ourselves as much as we did initially, but we had a good time, we had people going to lunch with us. 00:39:15

And then over the years, I guess it had been a couple of years, 2 or 3 years together doing that. We said, you know, I think you were the one who might have brought it up initially when we were together and you said, “What do you think about starting our own firm?” And that had not entered my mind at all. I was thinking, I was I guess around 60 at that time. I was thinking well I’ll just keep working for a few more years, go off into the sunset. But as we talked, it made a little sense, you know, then eventually, we said, “Let’s get more serious”. 00:39:47 So we started meeting for breakfast every Saturday morning for like, this went on for like a year. And it probably seemed like 5 years to you. But one thing I learned at Anheuser Busch was how to plan, big-on planning. They used to do 5-year plans, you know, constantly updating the 5-year plan. So, I said, it sounds like this isn’t going to make sense, but let’s plan this thing out. So, we would meet every Saturday. I’d bring along all my notes and my questions for you, you know. We’d meet for breakfast and we kept doing it and I guess our wives thought we were crazy, I don’t know. But we kept doing that and it started coming together because the big thing as to why it made sense, was I had the financial background. I had the clients, you had all the experience knowing how you worked with all these other (inaudible) all over the country and how they operated. 00:40:44 You had all the operations experience. So, it did make a great fit for us to get going as from a business point of view. I think my concern only was, we were friends already, and I didn’t want, you know, you hate to have ruin a friendship by starting a business if we don’t get along for whatever reason. But we said we like each other, let’s go ahead and do it. So, I remember… I don’t know when you felt, let’s do it. But it kind of grew on me I might say. But once I saw that we could do it financially, and we could stay friends, I thought, let’s go ahead and make the decision and approach our prior firm, Buckingham, that we’re leaving.

00:41:24 MH Yeah, I don’t know, I mean one of the things I you said to me was you’d been a W-2 employee your whole life and if you were ever going to do something different, now was a good time. And I really felt like if I was ever going to do something entrepreneurial, you were the best person to do it with. And I think, again, our aim was really true. You know, your experience, and my past experience, we both wanted to really serve and educate people on this approach that we thought could make a real positive difference in their lives. And I think together, we thought we were on a mission. And almost in a strange way, I never had that much doubt actually that we would be good together, it was just a matter of would it catch on or would we be able to build the business, but we knew we had fun together, we knew we were both bonded by the same sort of mission and purpose and we knew we loved, you know, applying what we knew to real life situations. So, I knew it was going to be fun. The question was would it be successful as a business. But, we were, and we were having a good time at the place where we worked. We left because we saw better opportunity now because we had a problem. 00:42:30 June of 2005, that’s when we decide to leave. And we always refer to the day we were leaving as D-Day and yet I don’t think we realized what.

00:42:42 RH It was D-Day!

00:42:43 MH Yeah, the actual day we left was really D-Day. I mean…

00:42:48 RH I know.

00:42:49 MH Maybe subconsciously it was there, we just didn’t acknowledge it.

00:42:50 RH [Crosstalk]

00:42:51 MH The day we went to talk to the people we were working with and tell them we were going to start our own firm. So, we get going and we get going where? Where did we start our firm?

00:43:00 RH Well, yeah, but the big thing there was we weren’t quite sure how they would react to our decision and we thought well we didn’t want to commit to a lot of, you know, a long-term lease on an office building. And so we said, okay, I was building a new house at the same exact time as being completed in June 2005. So, we said, “Let’s work in my basement”. So actually, as we built the house, we did add a few extra features like lots of wires and lines.

00:43:27 MH Oh yeah, you’ve got a basement that is wired for major activity, thanks to us.

00:43:32 RH So anyway, we notified our prior employers we want to start our own firm. They were very amicable separation. They were very supportive and that was a relief to both of us. And so we, and just in case, we started in our basement. And we had all the electronic equipment, computers and printing machines. The questions there was, would clients want to leave an established firm and go with two guys working in a basement.

00:44:08 MH Yeah, that’s a legitimate question.

00:44:10 RH And we always said, well great businesses either start in the garage or the basement. And we started ours in the basement. Fortunately, almost every client of mine said, “I’ll go with you.” Because we weren’t changing any philosophy, just changing the location, really. But luckily, all of them felt the same way; yeah, I like the philosophy, we’re not going to change that, we like you guys. So that was a relief when our clients kept saying, “Yes, yes, we’ll go with you all”.

But for like 6-7 months, we were in the basement. And I would get up in the morning, that was different also. I was so used to getting up and getting dressed and driving the car. And I had to get up, get dressed, take a shower and go downstairs and wait for you to come over. And I’d be down in the basement working hard, you know, looking through things, I’d hear you knocking, I’d hear you coming through the garage or come through the front door and Lynn would be there talking to you. I’d say, okay well Matt’s here, good. And it would be a half hour later and you wouldn’t come down. I’d say, where in the heck is that guy. He’s still talking to Lynn and come on down. And I was thinking, what is he doing up there? You would come down, you know, and then we’d start working. It was one of those things, where I was wondering if my wife would like us being there, but she loved it. She loved talking to you and loved us being there.

So, the first 6-7 months really worked out well. We had clients come by and visit our house, you know. We had client meetings there. So really it was a great way to start a business until we decided, okay, let’s make this a little bit more official. 00:45:44 I mean, we got into an office building and rented the space.

00:45:47 MH What I think is pretty cool is if you think, you’re now 76, you’re still hugely an important piece of the puzzle at Hill Investment Group, and I was thinking about our vision and mission and values. Not a lot has changed.

00:46:03 RH No, I look back at our original planning back in ’05. And yeah, the mission of our firm always was, you know, to get people or clients to ignore Wall Street and go on and enjoy their lives, spend time with more valuable, like their families and their kids and their activities and work. It takes… most of our clients come in with investing is all part of their life. And they come in with all their financial statements, you know, with both the time and the worry. And what I like is clients now come in with, they walk in with their Bermuda shorts, they’ve been on the golf course, you know, and doing some charity work, you know. They have nothing in their hands, rather just a pencil. And they just sit down, we talk to them, you know. You can see that their life is better. So, I think that’s one nice thing about this philosophy, once you believe it and once you see it, then you can… the emotion… you still feel bad when the market goes down, I think, but a lot less stress and emotional attachment to your investments. You know, you can’t control it. People generally think that they can control the markets, you know, but you just gotta accept it. You cannot control what happens in the markets. It will do well if you stay the course.

00:47:25 MH I remember when we started, I think you said something to me like, “I’ll commit to you for 5 years”. And here we are many, many years later. Do you have friends who ever ask you why you’re still working?

00:47:37 RH Not as many as I thought I would. Because most of my friends, all of my friends are retired and… I think they all feel… I think what they feel is they can see I enjoy what I’m doing. They might talk to my wife about that. They don’t talk to me directly as much, but yeah this is well beyond my work life and well beyond anything I anticipated either at Anheuser Busch or when I started with Buckingham or when I started with our firm. And I do recall, I said I’d give you at least definitely 5 years so we can get this business started, you know, and then we can see how it goes. 00:48:12

But, of course now, it’s been 14 years. But it’s one of those things I enjoy it so much. You know, I get up in the morning, I’m excited about getting up, going to work and then I enjoy being with the people at work. I enjoy our co-workers. I enjoy our clients. When I get calls from a client, it’s always generally, even when the market is going down, it’s never like, you know, it’s always a pleasant phone call. So, people I think appreciate what we’re doing. And when I leave, when I drive home, I always used to think back on my day at Anheuser Busch and even now, “Was I productive today? Did I add value to somebody? Did I help a client? Did I help a co-worker? Did I contribute anything to the firm or to the clients?” And I always feel the answer is yes. 00:49:06

So as long as I feel that way, and I have personal time to do the things I like doing, there’s nothing better that I’d rather do than do this. I think it’s actually helped me health-wise, you know, mentally keeping mentally sharp. So really, a lot of my friends now having health issues, you know, unfortunately with either ill hip or knees or something else. So, I think in everything I read about, you know, retiring is the biggest concern is people do… can have problems. But I always ask people who I know who are retired, “How do you like retirement? And what do you do?” And that’s always a question when I meet anybody new. And I play golf and then I play golf together, another couple who may join us, you know, we’d have two couples when we were in California, we go to Palm Desert. When I see another couple in the golf cart, and I can see that they’re retired. They have a fancy golf cart with head lights and everything else. So I always ask them, “Where you from? What did you do, you know? When did you retire?” And if they’re friendly enough, I keep asking do you enjoy retirement? And most of them say yes they do enjoy retirement. And then I’ll say, “What do you do in a typical week? What’s it like?” And I remember this one gentleman from Chicago said, “Well, I play golf 4 times a week. My wife and I play bridge a couple days a week. I go play Bingo 2-3 nights a week at the club. And I take a nap 5 times a day… eh 5 times a week”. And as he’s talking, I’m thinking this doesn’t sound very exciting to me. I said it must be better than this. I can’t find anything better to do. And I just think that, you know, at my age I can still contribute. I mean if I felt like I wasn’t contributing, I wouldn’t do it, I think. But I think my age can be some advantage where you’ve been through multiple market declines. 00:51:07

So I know how it feels to go through a down period in the market. But I also know if you stay the course, you’re going to come out of it. But you need someone to walk you off the edge and tell you that… and people appreciate in being told and they say, “Well at least you’ve lived through several of these things, so I can kind of believe you.” So, I think my age is actually an asset to some extent. My technology skills is still a little bit lacking. That’s why I need people like yourself, Matt, and other people to help me. The things we’ve delegated, my skills, my job, do things I’m good at and things I like doing. A lot different from the old brokerage days where I was doing things I didn’t like doing. So, everything I do now, I really enjoy doing.

00:51:55 MH So let me embarrass you for a minute because I know you love it when I say nice things about you. Number one, you know, I got you in with the person who cuts your hair. And one time we were talking, and I said, “What do you think about Rick?” And she said, “You know my fear is that they don’t make people like Rick anymore.” And I really think that is the case. You are a world-class human. You are a really exceptional person and you have made a huge difference in my life. You’ve made a huge difference in our team’s life, we now have an office in Houston, TX and great people there, and great people here in St. Louis have grown tremendously.

But I love your story, I love your experience and I love the generosity that you, the way you share it with others. And the way you… it feels to me like your commitment now is really to not necessarily make your own life better, but to make other people’s lives better. And not just our clients, but our team. And so, we are all grateful to you. We’re grateful to be a part of your world.

00:52:56 RH Wow! Thank you Matt. Not that… I want reciprocate a little bit because your skill set is, as what I’ve told you before, you’re the Bob Costas of the financial industry as far as how you communicate our message. It’s not easy to communicate because it’s kind of complicated. I mean, people… it’s easy to tell somebody I want to be buy the… recommend this stock in this thing because it’s beating the market, something like that. It’s an easier story to tell to tell somebody take the long view, you know, it’s all based on academic evidence, you know, empirical studies, you gotta stick with it. 00:53:35

It’s harder to explain that message, but you’ve helped me and helped our firm do that. So, I’d say we are a good team. I think that’s one thing… I look back at my life and I think, “What has made me successful?” And I think I figured it out. It actually happened when I prepared for this podcast, really. I think if you believe… the place you work at, you believe in their mission, and you really believe in what you’re doing for that company is good for humanity, good for the consumer, if you like the people you’re working with, you like those people, that’s great. And you like the work you actually do at the job, if they all mesh together, you have a great life. And now I feel very lucky at Anheuser Busch and with our firm, I have all three of those things mesh. And I think that’s fortunate. 00:54:47

I talk to people and I tell them, and really if you get those three combinations, the mission of the firm, the people and what you do at your actual work, you have an unbeatable combination. You won’t think it’s work which is how I feel. It’s not really work to me. It’s surely just… in having work and having personal time, the combination is great also. So, I feel very fortunate. I mean I look back at my life and I just think, that guy Roz always says, is it luck or is it skill? I gotta say for me it’s both. But I think luck had a lot to do with my success. And I don’t really feel I’m that successful, but I do feel very content in my life. So, I just keep doing what I’m doing.

00:55:18 MH Well thank you Rick. Thank you for sharing your stories and thank you for the time you’ve spent with me throughout our relationship. You know one of the coolest things is when you feel understood. And we have a shorthand with one another that it’s rare. It’s really unique and I’m super grateful. So, thanks for doing this. Thanks for being on a podcast. Is this your first time being a guest on a podcast?

00:55:42 RH Oh yeah, first time. Probably last!

00:55:46 MH Well thanks man! And thanks to everybody who listened to Take the Long View with Matt Hall and today, Rick Hill. And if you like what you have heard here, please subscribe and consider following us on our Hill Investment Group Newsletter. And until next time, thanks so much!